Why Twitter Earnings Matter to Nasdaq Traders

Why Twitter Earnings Matter to Nasdaq Traders

After GOOG reported earnings on Monday, all eyes turned toward Twitter, the next tech bellwether, due to report Q4 earnings on Thursday.

Why Twitter Earnings Matter to Nasdaq Traders
Why Twitter Earnings Matter to Nasdaq Traders WDnet Studio via StockSnap

February has begun, and the earnings calendar is still playing out. Alphabet (GOOG), formerly known as Google, reported on Monday and beat on earnings per share as well as revenue. However the stock was volatile; initially, it rallied, then sold off due to concerns over Alphabet’s expenditures, but then rallied back again to close Tuesday’s session with modest gains.

A host of big names are still due to report this week, but most of them are not expected to cause an overall reaction in any of their respective U.S. stock indices. However, Twitter (TWTR) remains the most noteworthy name scheduled to report this week, and its earnings release provides Nadex traders potential trading opportunities on the US Tech 100 options.

Twitter has been a popular source of social media, but it has been the source of some long-term concerns about growth and earnings potential. However, its price has nearly tripled since the beginning of 2017, only to fall by nearly 40% in the second half of last year.

At the start of 2019, Bank of America/Merrill Lynch became bullish on Twitter with their analytics suggesting that the 18-29 demographic were starting to use the platform even more. The company will report earnings tomorrow (Thursday) ahead of the market open, and Wall Street is expecting an 18.9% jump in revenues to $869.5 million with a 31.6% swelling of profits to 25 cents per share.

The most interesting part of the daily chart for TWTR is the gap that is left from July of ‘18 when the company reported Q2 earnings. Since then, the stock has experienced resistance above the $36-$37 area. Should the company produce positive results tomorrow, this stock could quickly take out that resistance area which could lead to a lot of short covering. While the stock needs a roughly 25% gain to fill that earnings gap from last summer, it’s not out of the realm of possibility for it to target that area.

Should Twitter come in as a positive, it will help the overall tech sector, and the Nasdaq should continue to rally, giving the Nadex US Tech 100 options a boost in activity. In the event that TWTR falls short on earnings, the support level to watch would be the $26 area of last year's double-bottom. Traders of the Nasdaq may want to keep a TWTR chart up throughout tomorrow's session to serve as a leading indicator.

Today’s Economic Calendar:

  • MBA Mortgage Applications 7:00 AM ET
  • International Trade 8:30 AM ET
  • Productivity and Costs 8:30 AM ET
  • EIA Petroleum Status Report 10:30 AM ET
  • 10-Yr Note Auction 1:00 PM ET
  • Randal Quarles Speaks 6:05 PM ET
  • Jerome Powell Speaks 7:00 PM ET

This week’s notable earnings:

WEDNESDAY

Boston Scientific (BSX), Chipotle Mexican Grill (CMG), Cummins (CMI), General Motors (GM), GoPro (GPRO), Humana (HUM), MetLife (MET), New York Times (NYT), O’Reilly Automotive (ORLY), Spirit Airlines (SAVE), Spotify (SPOT), Toyota (TM), Valvoline (VVV), and Zynga (ZNGA)

THURSDAY

Cardinal Health (CAH), Dunkin’ Brands (DNKN), Expedia (EXPE), Kellogg (K), Mattel (MAT), Twitter (TWTR), Tyson Foods (TSN), Western Union (WU), World Wrestling Entertainment (WWE), and Yum! Brands (YUM)

Friday:

Hasbro (HAS), and Phillips 66 (PSX)

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